Letter: State of the Union

Published: Monday, February 18, 2013 at 02:21 PM.

Second, they can (and will) start hiring more part time workers in an effort to eliminate costly benefits from their expense reports.

Third, they can (and will) start raising their prices on the products they sell or services they offer.

What will the first and second scenario mean? More people dependent upon the federal government for welfare and food stamps.

What will this third scenario mean? This third scenario undoubtedly means that folks who are currently working above the $7.25 per hour minimum wage will find their living expenses suddenly pinched by the resultant rising prices of goods and services.

President Obama stated in his State of the Union Address this week that he wants to see the minimum wage raised to $9 per hour. As we have already witnessed, “elections have consequences”... it seems to me that President Obama has failed to examine the likely consequences of forcing this upon the employers — and current employees — of American Commerce.

In North Carolina, the minimum wage is currently $7.25 per hour. Raising just one full-time employee’s wages to $9 per hour means a $70 per week expense for the employer, which computes to an added expense of $2,800 per year — per employee for the employer. American Commerce survives somewhere between expenses and profits.

An employer with just 10 full-time minimum wage employees would see an annual expense increase of $28,000 per year. This is a good time to note that one employee at the current rate of $7.25 per hour earns $15,080 per year, therefore the increase of $28K is very nearly close to what two full-time employees currently make.

What will such an employer of 10 minimum wage employees gain from this extra $28k expense? Absolutely nothing. Add this extra expense to the costs of Obamacare being heaped upon employers, and you have a mess to be reckoned with.

What options will employers have in response to this new expense?

First off, they can (and will) start laying people off.

Second, they can (and will) start hiring more part time workers in an effort to eliminate costly benefits from their expense reports.

Third, they can (and will) start raising their prices on the products they sell or services they offer.

What will the first and second scenario mean? More people dependent upon the federal government for welfare and food stamps.

What will this third scenario mean? This third scenario undoubtedly means that folks who are currently working above the $7.25 per hour minimum wage will find their living expenses suddenly pinched by the resultant rising prices of goods and services.